Why Fair Isaac Corporation Plunged Today

Shares of Fair Isaac Corporation (NYSE: FICO) plunged 25.4% on Tuesday as of 1:32 p.m. EDT.

Fair Isaac has long been an investor favorite due to its monopoly on the FICO score, a standard credit score used by virtually all lenders when evaluating borrowers for loans.

However, it appears the Trump Administration, along with the rest of the housing industry, is aggressively empowering a new FICO competitor. Needless to say, when a company with a monopoly sees that monopoly erode, the stock can undergo a big rerating. So, it's no surprise to see this big move down today.

FICO plunges amid barrage of attacks

Federal Housing Finance Agency (FHFA) director Bill Pulte has seemingly had it in for Fair Isaac in the second Trump term. In the years leading up to 2025, FICO had aggressively increased the price of FICO scores, roughly doubling them since the end of Trump's first term. Over the past two years, Pulte has been advocating for VantageScore, a new type of credit score co-developed by the three major credit bureaus Equifax (NYSE: EFX), Experian (OTC: EXPGF) (OTC: EXPGY), and TransUnion (NYSE: TRU).

Things have come to a head this month, and especially last night and today. In early September, Pulte posted on X that all securitized products from Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC) could use either or both FICO and VantageScores. Pulte also highlighted VantageScore's growing market share, which reached 13% of the credit-scoring market. Pulte also noted that he had asked FICO for "competitive pricing" on its 10T credit-scoring model.

Late yesterday, Pulte again took to X to announce that Fannie and Freddie would be moving to one pricing grid for both FICO and VantageScore credit scores. Before this, lenders would need to charge higher loan rates for VantageScore-based loans sold to Fannie Mae and Freddie Mac. That could have kept FICO as the preferred score, despite FICO being much more expensive than VantageScore. However, Fannie Mae and Freddie Mac now treat loans made with either score equally, essentially erasing that advantage for FICO.

We are Simplifying Mortgage Pricing following feedback from lenders and consumers. Instead of two separate pricing grids, which makes zero sense, Fannie and Freddie are hereby moving to ONE PRICING GRID with VantageScore joining the existing FICO Classic pricing grid. pic.twitter.com/g9h1EqsDca

-- Pulte (@pulte) September 28, 2026

Additionally, TransUnion announced today that it would keep VantageScore 4.0 pricing at $0.99 through December 2028. That means VantageScore will remain much cheaper than FICO for the next two-plus years, at least for credit scores run through TransUnion.

On top of that, Rocket Mortgage, part of Rocket Companies (NYSE: RKT), announced that it will now use VantageScore as its preferred credit scoring model -- the first lender to do so. That's a big deal, as Rocket Mortgage is the country's largest mortgage originator by volume.

Image source: Getty Images.

Is FICO a value, or a value trap?

Not only is FICO's monopoly weakening, but the company has been battered on multiple fronts by the government, the credit bureaus, and the nation's largest mortgage originator. It's no wonder the stock is down so much today, and down roughly 65% from its all-time high.

Fair Isaac actually looks like a value stock here, trading at just 14 times 2026 earnings estimates. That being said, it's very unclear whether FICO will lose material market share or have to significantly cut FICO score pricing. So, the stock is still risky, but worth following in case these worst-case scenarios don't come to pass.

Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Equifax and Rocket Companies. The Motley Fool recommends Experian Plc and Fair Isaac. The Motley Fool has a disclosure policy.